Hong Kong and London will be taking the lead in developing offshore yuan trading, stoking expectations for a wave of yuan-related financial instruments to come.
The tie-in with the City of London cemented this week includes 15-hour currency trading hours to ensure overlap as well as a biannual working group made up of Bank of China, Barclays, Deutsche Bank, HSBC and Standard Chartered to steer development.
Hong Kong Monetary Authority chief executive Norman Chan Tak-lam said banks worldwide will be able to provide a wider range of yuan banking and financial services to help internationalise the currency and meet consumer demand.
Delta Asia Financial head of equity markets Conita Hung Lai-ping said a proliferation of yuan-denominated structured products could be as close as a year provided more elementary products sell well.
"The stage has been set and as the market matures, Chinese authorities will have the confidence to allow for more structured products in RMB terms," she said.
Demand for yuan-related products has exploded and is set to continue according to Secretary for Financial Services, the Treasury professor Chan Ka-keung and other notables at the annual Asian Financial Forum in Hong Kong.
Yuan-denominated bond sales, so-called dim sum bonds, quadrupled to a record $23.7bn last year while the number of issuers leapt from 19 to 87 in 2010.
The yuan has yet to become fully convertible, but has been undergoing gradual liberalisation since 2009. Financial firms are now able to make yuan transfers among themselves to offer yuan-denominated investment products with the UK handling nearly a third of all yuan foreign exchange trades.